# Ardent Health, Inc.: Form 10-Q for the period ended Mar 31, 2025

- Company: [Ardent Health, Inc.](/companies/ardt.md) (CIK 1756655)
- Form: 10-Q
- Filed: 2025-05-07
- Accepted by EDGAR: May 7, 2025, 16:31 ET
- Period: 2025-03-31
- Accession: 0001628280-25-023210
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1756655/000162828025023210/ardt-20250331.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1756655/000162828025023210/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2025-03-31.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2025-01-01 to 2025-03-31 | $1.50bn | us-gaap:Revenues |
| Income tax | 3 months, 2025-01-01 to 2025-03-31 | $15.2m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2025-01-01 to 2025-03-31 | $41.4m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2025-01-01 to 2025-03-31 | $0.29 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2025-01-01 to 2025-03-31 | $0.30 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2025-01-01 to 2025-03-31 | 140,704,075 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 3 months, 2025-01-01 to 2025-03-31 | −$24.8m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Cash and equivalents | at 2025-03-31 | $495.0m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2025-03-31 | $1.76bn | us-gaap:AssetsCurrent |
| Total assets | at 2025-03-31 | $4.91bn | us-gaap:Assets |
| Current liabilities | at 2025-03-31 | $830.1m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2025-03-31 | $3.35bn | us-gaap:Liabilities |
| Long-term debt | at 2025-03-31 | $1.09bn | us-gaap:LongTermDebtNoncurrent |
| Current portion of debt | at 2025-03-31 | $17.8m | us-gaap:LongTermDebtCurrent |
| Shareholders' equity | at 2025-03-31 | $1.18bn | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 71,438 characters.

### RESULTS OF OPERATIONS

#### Management's discussion and analysis of our financial condition and results of operations should be read in conjunction with

#### our interim unaudited condensed consolidated financial statements and related notes contained elsewhere in this Quarterly

#### Report on Form 10-Q for the quarter ended March 31, 2025 (this "Quarterly Report") and our audited consolidated financial

#### statements for the year ended December 31, 2024 and related notes contained in the Annual Report. The following discussion

#### includes forward-looking statements that involve risks and uncertainties, as well as assumptions that, if they never

#### materialize or prove incorrect, could cause our results to differ materially from those expressed or implied by such forward-

#### looking statements. When reviewing the discussion below, you should keep in mind the substantial risks and uncertainties

#### that could impact our business. In particular, we encourage you to review the risks and uncertainties described in the section

#### titled “Risk Factors” included elsewhere in this Quarterly Report and the Annual Report. These risks and uncertainties could

#### cause actual results to differ materially from those projected in forward-looking statements contained in this Quarterly

#### Report or implied by past results and trends. Our historical results are not necessarily indicative of the results that may be

#### expected for any period in the future, and our interim results are not necessarily indicative of the results we expect for the full

#### fiscal year or any other period.

#### Unless otherwise indicated, all relevant financial and statistical information included herein relates to our consolidated

#### operations. Additionally, unless the context indicates otherwise, Ardent Health Partners, Inc. and its affiliates are referred to

#### in this section as “we,” “our,” or “us.”

### Forward-Looking Statements

This Quarterly Report may contain certain “forward-looking statements,” as that term is defined in the U.S. federal securities

laws. These forward-looking statements include, but are not limited to, statements other than statements of historical facts,

including, among others, statements relating to our future financial performance, our business prospects and strategy,

anticipated financial position, liquidity and capital needs, the industry in which we operate and other similar matters. Words

such as “anticipates,” “expects,” “intends,” “plans,” “predicts,” “believes,” “seeks,” “estimates,” “could,” “would,” “will,”

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“may,” “can,” “continue,” “potential,” “should” and the negative of these terms or other comparable terminology often

identify forward-looking statements. These forward-looking statements are not guarantees of future performance and are

subject to risks and uncertainties that could cause actual results to differ materially from the results contemplated by the

forward-looking statements. Factors, risks, and uncertainties that could cause actual outcomes and results to be materially

different from those contemplated include, among others: (1) general economic and business conditions, both nationally and

in the regions in which we operate, including the impact of challenging macroeconomic conditions and inflationary pressures,

current geopolitical instability, and impacts from the imposition of, or changes in, tariffs, as well as the potential impact on us

of uncertain political, financial, credit and capital conditions; (2) possible reductions or other changes in Medicare, Medicaid

and other state programs, including Medicaid supplemental payment programs, Medicaid waiver programs or state directed

payments, that could have an adverse effect on our revenues and business; (3) reduction in the reimbursement rates paid by

commercial payors, increased reimbursement denials or payment delays by commercial payors, our inability to retain and

negotiate favorable contracts with private third party payors, or an increasing volume of uninsured or underinsured patients;

(4) security threats, catastrophic events and other disruptions affecting our, our service providers’ or our joint venture (“JV”)

partners’ information technology and related systems, which have adversely affected, and could in the future adversely affect,

our relationships with patients and business partners and subject us to legal claims and liabilities, reputational harm and

business disruption and adversely affect our financial condition; (5) the highly competitive nature of the healthcare industry

and continued industry trends towards clinical transparency and value-based purchasing may impact our competitive position;

(6) inability to recruit and retain quality physicians, as well as increasing cost to contract with hospital-based physicians; (7)

changes to physician utilization practices and treatment methodologies and other factors outside our control that impact

demand for medical services and may reduce our revenues and ability to grow profitability; (8) continued industry trends

toward value-based purchasing, third party payor consolidation and care coordination among healthcare providers; (9)

inability to successfully complete acquisitions or strategic JVs or inability to realize all of the anticipated benefits; (10)

liabilities because of professional liability and other claims brought against our hospitals, physician practices, outpatient

facilities or other business operations; (11) exposure to certain risks and uncertainties by the JVs through which we conduct a

significant portion of our operations, including anticipated synergies, of past acquisitions and the risk that transactions may

not receive necessary government clearances; (12) failure to obtain drugs and medical supplies at favorable prices or

sufficient volumes; (13) operational, legal and financial risks associated with outsourcing functions to third parties; (14) our

facilities are heavily concentrated in Texas and Oklahoma, which makes us sensitive to regulatory, economic and competitive

conditions and changes in those states; (15) negative impact of severe weather, climate change, and other factors beyond our

control, which could restrict patient access to care or cause one or more facilities to close temporarily or permanently; (16)

risks related to the Ventas Master Lease and its restrictions and limitations on our business; (17) the impact of our significant

indebtedness and the ability to refinance such indebtedness on acceptable terms; (18) the impact of a deterioration of public

health conditions associated with a future pandemic, epidemic or outbreak of infectious disease; (19) our failure to comply

with complex laws and regulations applicable to the healthcare industry or to adjust our operations in response to changing

laws and regulations; (20) the impact of governmental claims or governmental investigations, payor audits and litigation

brought against our hospitals, physician practices, outpatient facilities or other business operations; (21) actual or perceived

failures to comply with applicable data protection, privacy and security laws, regulations, standards and other requirements;

(22) inability to or delay in building, acquiring, selling, renovating or expanding our healthcare facilities; (23) failure to

comply with federal and state laws relating to Medicare and Medicaid enrollment, permit, licensing and accreditation

requirements; (24) effects of changes in healthcare policy, including any reforms that may be undertaken by the current

presidential administration, and legal and regulatory restrictions on our hospitals that have physician owners; (25) the results

of our efforts to use technology, including artificial intelligence and machine learning, to drive efficiencies, better outcomes

and an enhanced patient experience; (26) our status as a controlled company; (27) conflicts of interest between our

controlling stockholder and other holders of our common stock; and (28) other risk factors described in our filings with the

SEC, including the Annual Report.

We caution you that the foregoing list may not contain all of the risks and uncertainties that may affect the forward-looking

statements made in this Quarterly Report. You should not rely upon forward-looking statements as predictions of future

events.

The forward-looking statements in this Quarterly Report are based on management’s current beliefs, expectations, and

projections about future events and trends affecting our business, results of operations, financial condition, and prospects.

These statements are subject to risks, uncertainties, and other factors described in the “Risk Factors” section and included in

the Annual Report. We operate in a competitive and rapidly changing environment where new risks and uncertainties can

emerge, making it impossible to predict all potential impacts on our forward-looking statements. Consequently, actual results

may differ materially from those described. The forward-looking statements pertain only to the date they are made, and we do

not undertake any obligation to update them to reflect new information or events unless required by law. You are advised not

to place undue reliance on these statements and to consult any additional disclosures we may provide through our other

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filings with the SEC, such as Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form

8-K.

### Overview

Ardent is a leading provider of healthcare services in the United States, operating in eight growing mid-sized urban markets

across six states: Texas, Oklahoma, New Mexico, New Jersey, Idaho and Kansas. We deliver care through a system of 30

acute care hospitals and approximately 280 sites of care with 1,881 employed and affiliated providers as of March 31, 2025.

Affiliated providers, which have increased 9.2% compared to March 31, 2024, are physicians and advanced practice

providers with whom we contract for services through a professional services agreement or other independent contractor

agreement. We hold a leading position in a majority of our markets, and we believe we are one of the leading healthcare

systems based on market share and our integrated network of hospitals, ambulatory facilities, and physician practices. We

operate either independently or in partnership with premier academic medical centers, large not-for-profit hospital systems,

community physicians, and a community foundation through our well-established and differentiated JV model. Collectively,

we operate with a consumer-centric approach to caring for our patients and our communities. Our strategic JV partners offer

us significant advantages, including expanded access points, clinical talent availability, local brand recognition, and scale that

enable us to accelerate market penetration. We believe that we help our partners enhance their network and regional presence

through our operational acumen. We strive to strengthen clinical services, drive operating improvements, and centrally

manage operations to optimize hospital performance and enhance patient care. In each of these partnerships, we are the

majority owner and serve as the day-to-day operator.

### Recent Developments

### Urgent Care Acquisitions

On January 1, 2025, we completed the acquisitions of certain assets and operations of 18 urgent care clinics in New Mexico

and Oklahoma for a combined purchase price of $27.5 million. The consideration transferred consisted solely of cash. Upon

closing of the acquisitions, approximately $4.1 million was placed into escrow to cover potential working capital adjustments

and to secure certain representations and warranties pursuant to the terms of the purchase agreements. This escrow amount is

included in the total purchase consideration of $27.5 million. Most of the combined purchase price for assets and operations

acquired was recorded as goodwill with an immaterial portion allocated to identifiable assets acquired and liabilities assumed.

The fair values of assets and liabilities recorded as of March 31, 2025 related to these acquisitions are provisional and will be

finalized at the close of the measurement period.

### Term Loan B Facility Repricing

On September 18, 2024, we executed an amendment to reprice our Term Loan B Facility credit agreement (the "Term Loan

B Credit Agreement"). The repricing reduced the applicable interest rate by 50 basis points from Term SOFR (as defined in

the Term Loan B Credit Agreement) plus 3.25% to Term SOFR plus 2.75% and from the base rate plus 2.25% to the base

rate plus 1.75% and it eliminated the credit spread adjustment. No modifications were made to the maturity of the loans as a

result of the repricing and all other terms were substantially unchanged.

### Initial Public Offering and Corporate Conversion

On July 19, 2024, we completed an IPO of 12,000,000 shares of our common stock, at a public offering price of $16.00 per

share for aggregate gross proceeds of $192.0 million and net proceeds of approximately $181.4 million after deducting

underwriting discounts and commissions of approximately $10.6 million. The IPO provided the underwriters with an option

to purchase up to an additional 1,800,000 shares of our common stock, which was fully exercised by the underwriters, and,

on July 30, 2024, we issued 1,800,000 additional shares of common stock at $16.00 per share for additional net proceeds of

approximately $27.2 million, after deducting underwriting discounts and commissions of approximately $1.6 million. Our

common stock is listed on the New York Stock Exchange under the symbol “ARDT”.

On July 17, 2024, in connection with the IPO and immediately prior to the effectiveness of our registration statement on

Form S-1, we converted from a Delaware limited liability company into a Delaware corporation by means of a statutory

conversion (the “Corporate Conversion”) and changed our name to Ardent Health Partners, Inc. As a result of the Corporate

Conversion, the outstanding limited liability company membership units and vested profits interest units were converted into

120,937,099 shares of common stock and outstanding unvested profits interest units were converted into 2,848,027 shares of

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restricted common stock. Immediately following the Corporate Conversion, ALH Holdings, LLC, a subsidiary of Ventas, Inc.

("Ventas"), contributed all of its outstanding common stock in AHP Health Partners, Inc. ("AHP Health Partners"), our direct

subsidiary, to Ardent Health Partners, Inc. in exchange for 5,178,202 shares of common stock of Ardent Health Partners, Inc.

(the "ALH Contribution"). The Corporate Conversion and the ALH Contribution have been retrospectively applied to prior

periods herein for the purposes of calculating basic and diluted net income per share. Our certificate of incorporation

authorizes 750,000,000 shares of common stock and 50,000,000 shares of preferred stock, each with a $0.01 par value per

share.

### ABL Credit Agreement Amendment and Term Loan B Facility Prepayment

On June 26, 2024, we executed an amendment to our ABL Credit Agreement to increase the revolving commitment by

$100.0 million to $325.0 million and extend the maturity date to June 26, 2029. Concurrent with the execution of this

amendment on June 26, 2024, we also prepaid $100.0 million of the outstanding principal on our Term Loan B Facility. The

$100.0 million prepayment was applied in direct order of maturities of future payments, and no modification was made to the

Term Loan B Facility as a result of this prepayment.

### Key Factors Impacting Our Results of Operations

### Staffing and Labor Trend

Our operations are dependent on the efforts, abilities and experience of our management and medical support personnel, such

as nurses, pharmacists and lab technicians, as well as our physicians. We compete with other healthcare providers in

recruiting and retaining qualified management and support personnel responsible for the daily operations of each of our

hospitals and other facilities, including nurses and other non-physician healthcare professionals. At times, the availability of

nurses and other medical support personnel has been a significant operating issue for healthcare providers, including at

certain of our facilities. The impact of labor shortages across the healthcare industry may result in other healthcare facilities,

such as nursing homes, limiting admissions, which may constrain our ability to discharge patients to such facilities and

further exacerbate the demand on our resources, supplies and staffing.

We contract with various third parties who provide hospital-based physicians. Third party providers of hospital-based

physicians, including those with whom we contract, have experienced significant disruption in the form of regulatory

changes, including those stemming from enactment of the No Surprises Act, challenging labor market conditions resulting

from a shortage of physicians and inflationary wage-related pressures, as well as increased competition through consolidation

of physician groups. In some instances, providers of outsourced medical specialists have become insolvent and unable to

fulfill their contracts with us for providing hospital-based physicians. The success of our hospitals depends in part on the

adequacy of staffing, including through contracts with third parties. If we are unable to adequately contract with providers, or

the providers with whom we contract become unable to fulfill their contracts, our admissions may decrease, and our operating

performance, capacity and growth prospects may be adversely affected. Further, our efforts to mitigate the potential impact

on our business from third party providers who are unable to fulfill their contracts to provide hospital-based physicians,

including through acquisitions of outsourced medical specialist businesses, employment of physicians and re-negotiation or

assumption of existing contracts, may be unsuccessful. These developments with respect to providers of outsourced medical

specialists, and our inability to effectively respond to and mitigate the potential impact of such developments, may disrupt our

ability to provide healthcare services, which may adversely impact our business, financial condition and results of operations.

We also depend on the available labor pool of semi-skilled and unskilled employees in each of the markets in which we

operate. In some of our markets, employers across various industries have increased minimum wages, which has created

more competition and, in some cases, higher labor costs for this sector of employees.

### Seasonality

We typically experience higher patient volumes and revenue in the fourth quarter of each year in our acute care facilities. We

typically experience such seasonal volume and revenue peaks because more people generally become ill during the winter

months, which in turn results in significant increases in the number of patients we treat during those months. In addition,

revenue in the fourth quarter is also impacted by increased utilization of services due to annual deductibles, which are not

usually met until later in the year, and patient utilization of their healthcare benefits before they expire at year-end.

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### Inflation

The healthcare industry is labor intensive. Wages and other expenses increase during periods of inflation and when labor

shortages occur in the marketplace. In addition, our suppliers pass along rising costs to us in the form of higher prices. We

have implemented cost control measures in an attempt to curb increases in operating costs and expenses. We have generally

offset increases in operating costs by increasing reimbursement for services, expanding services and reducing costs in other

areas. However, we cannot predict our ability to cover or offset future cost increases, particularly any increases in our cost of

providing health insurance benefits to our employees.

### Geographic Data

The information below provides an overview of our operations in certain markets as of March 31, 2025.

*Texas*. We operated 13 acute care hospital facilities (including one managed hospital that is owned by The University of

Texas Health Science Center at Tyler, an affiliate of The University of Texas System) with 1,436 licensed beds that serve the

areas of Tyler, Amarillo and Killeen, Texas. For the three months ended March 31, 2025, we generated 37.6% of our total

revenue in the Texas market.

*Oklahoma*. We operated eight acute care hospital facilities with 1,173 licensed beds that serve the Tulsa, Oklahoma area. For

the three months ended March 31, 2025, we generated 24.6% of our total revenue in the Oklahoma market.

*New Mexico*. We operated five acute care hospital facilities with 619 licensed beds that serve the areas of Albuquerque and

Roswell, New Mexico. For the three months ended March 31, 2025, we generated 14.0% of our total revenue in the New

Mexico market.

*New Jersey*. We operated two acute care hospital facilities with 476 licensed beds that serve the areas of Montclair and

Westwood, New Jersey. For the three months ended March 31, 2025, we generated 10.7% of our total revenue in the New

Jersey market.

### Other Industry Trends

The demand for healthcare services continues to be impacted by the following trends:

- A growing focus on healthcare spending by consumers, employers and insurers, who are actively seeking lower-cost

care solutions;

- A shift in patient volumes from inpatient to outpatient settings due to technological advancements and demand for

care that is more convenient, affordable and accessible;

- The growing aged population, which requires greater chronic disease management and higher-acuity treatment; and
- Ongoing consolidation of providers and insurers across the healthcare industry.

Additionally, the healthcare industry, particularly acute care hospitals, continues to be subject to ongoing regulatory

uncertainty. Changes in federal or state healthcare laws, regulations, including the imposition of, or changes in, tariffs,

funding policies or reimbursement practices, especially those involving reductions to government payment rates or

limitations on what providers may charge, could significantly impact future revenue and operations. For example, the No

Surprises Act prohibits providers from charging patients an amount beyond the in-network cost sharing amount for services

rendered by out-of-network providers, subject to limited exceptions. For services for which balance billing is prohibited, the

No Surprises Act includes provisions that may limit the amounts received by out-of-network providers from health plans.

Any reduction in the rates that we can charge or amounts we can receive for our services will reduce our total revenue and

our operating margins.

### Results of Operations

### Revenue and Volume Trends

Our revenue depends upon inpatient occupancy levels, ancillary services and therapy programs ordered by physicians and

provided to patients, the volume of outpatient procedures and the charges and negotiated payment rates for such services.

Total revenue is comprised of net patient service revenue and other revenue. We recognize patient service revenue in the

period in which we provide services. Patient service revenue includes amounts we estimate to be reimbursable by Medicare,

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Medicaid and other payors under provisions of cost or prospective reimbursement formulas in effect. The amounts we receive

from these payors are generally less than the established billing rates, and we report patient service revenue net of these

differences (contractual adjustments) at the time we render the services. We also report patient service revenue net of the

effects of other arrangements where we are reimbursed for services at less than established rates, including certain self-pay

adjustments provided to uninsured patients. We also record estimated implicit price concessions (based primarily on

historical collection experience) related to uninsured accounts to record self-pay revenue at the estimated amount expected to

be collected.

Total revenue for the three months ended March 31, 2025 increased $58.2 million, or 4.0%, compared to the same prior year

period. The increase in total revenue for the three months ended March 31, 2025 consisted of an increase in adjusted

admissions of 2.7% and an increase in net patient service revenue per adjusted admission of 1.2%. The increase in adjusted

admissions reflected growth in admissions and emergency room visits of 7.6% and 2.3%, respectively, partially offset by a

decrease in total surgeries of 0.7%. The increase in net patient service revenue per adjusted admission was attributable to a

combination of a favorable payor mix and an increase in supplemental funding, partially offset by an increase in lower acuity

cases as compared to the same prior year period.

A key competitive strength and a significant component of our growth strategy has been our well-established and

differentiated JV model, which has resulted in partnerships with premier academic medical centers, large not-for-profit

hospital systems, community physicians, and a community foundation. During the three months ended March 31, 2025 and

2024, total revenue related to these entities was $428.6 million and $415.9 million, respectively, which represented 28.6%

and 28.9%, respectively, of our total revenue for such periods.

The following table provides the sources of our total revenue by payor:

|  | Three Months Ended March 31, 2025 | 2024 |
| --- | ---: | ---: |
| Medicare | 39.8% | 39.6% |
| Medicaid | 10.0% | 10.9% |
| Other managed care | 43.1% | 42.6% |
| Self-pay and other | 5.4% | 5.3% |
| Net patient service revenue | 98.3% | 98.4% |
| Other revenue | 1.7% | 1.6% |
| Total revenue | 100.0% | 100.0% |

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### Operating Results Summary for the Three Months Ended March 31, 2025

The following table sets forth, for the periods indicated, the consolidated results of our operations expressed in dollars and as

a percentage of total revenue.

*(Unaudited, dollars in thousands)*

|  | Three Months Ended March 31, 2025 Amount% |  | 2024 Amount% |  |
| --- | ---: | ---: | ---: | ---: |
| Total revenue | $1,497,234 | 100.0% | $1,439,046 | 100.0% |
| Expenses: |  |  |  |  |
| Salaries and benefits | 657,652 | 43.9% | 621,509 | 43.2% |
| Professional fees | 280,857 | 18.8% | 264,694 | 18.4% |
| Supplies | 258,855 | 17.3% | 257,781 | 17.9% |
| Rents and leases | 27,761 | 1.9% | 24,855 | 1.7% |
| Rents and leases, related party | 38,050 | 2.5% | 37,199 | 2.6% |
| Other operating expenses | 130,767 | 8.7% | 121,832 | 8.5% |
| Interest expense | 14,176 | 0.9% | 19,261 | 1.3% |
| Depreciation and amortization | 36,201 | 2.4% | 35,351 | 2.5% |
| Other non-operating gains | (21,283) | (1.4)% | — | 0.0% |
| Total operating expenses | 1,423,036 | 95.0% | 1,382,482 | 96.1% |
| Income before income taxes | 74,198 | 5.0% | 56,564 | 3.9% |
| Income tax expense | 15,233 | 1.1% | 10,713 | 0.7% |
| Net income | 58,965 | 3.9% | 45,851 | 3.2% |
| Net income attributable to noncontrolling interests | 17,582 | 1.1% | 18,804 | 1.3% |
| Net income attributable to Ardent Health Partners, Inc. | $41,383 | 2.8% | $27,047 | 1.9% |

The following table provides information on certain drivers of our total revenue:

| Operating Statistics | Three Months Ended March 31, 2025 | % Change | 2024 |
| --- | ---: | ---: | ---: |
| Total revenue (in thousands) | $1,497,234 | 4.0% | $1,439,046 |
| Hospitals operated (at period end) (1) | 30 | (3.2)% | 31 |
| Licensed beds (at period end) (2) | 4,281 | (1.0)% | 4,323 |
| Utilization of licensed beds (3) | 50% | 8.7% | 46% |
| Admissions (4) | 41,389 | 7.6% | 38,469 |
| Adjusted admissions (5) | 84,536 | 2.7% | 82,313 |
| Inpatient surgeries (6) | 9,250 | 3.4% | 8,946 |
| Outpatient surgeries (7) | 21,712 | (2.3)% | 22,223 |
| Emergency room visits (8) | 161,249 | 2.3% | 157,582 |
| Patient days (9) | 196,214 | 9.5% | 179,126 |
| Total encounters (10) | 1,450,629 | 2.7% | 1,412,472 |
| Average length of stay (11) | 4.74 | 1.7% | 4.66 |
| Net patient service revenue per adjusted admission (12) | $17,402 | 1.2% | $17,204 |

(1) “Hospitals operated (at period end).” This metric represents the total number of hospitals operated by us at the end of the applicable period, irrespective of

whether the hospital real estate is (i) owned by us, (ii) leased by us or (iii) held through a controlling interest in a JV. This metric includes the managed clinical

operations of the hospital at UT Health North Campus in Tyler, Texas (“UT Health North Campus Tyler”), a hospital owned by The University of Texas Health

Science Center at Tyler (“UTHSCT”), an affiliate of The University of Texas System. Since we only manage the clinical operations of UT Health North

Campus Tyler, the financial results of such entity are not consolidated under Ardent Health Partners, Inc.

On April 30, 2024, we closed UT Health East Texas Specialty Hospital, a long-term acute care hospital with 36 licensed patient beds (the “LTAC Hospital”) in

Tyler, Texas. The LTAC Hospital's inventory and fixed assets were transferred or repurposed to be used by our other hospitals.

(2) “Licensed beds (at period end).” This metric represents the total number of beds for which the appropriate state agency licenses a facility, regardless of whether

the beds are actually available for patient use.

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(3) “Utilization of licensed beds.” This metric represents a measure of the actual utilization of our inpatient facilities, computed by (i) dividing patient days by the

number of days in each period, and (ii) further dividing that number by average licensed beds, which is calculated by dividing total licensed beds (at period end)

by the number of days in the period, multiplied by the number of days in the period the licensed beds were in existence.

(4) “Admissions.” This metric represents the number of patients admitted for inpatient treatment during the applicable period.

(5) “Adjusted admissions.” This metric is used by management as a general measure of combined inpatient and outpatient volume. Adjusted admissions provides

management with a key performance indicator that considers both inpatient and outpatient volumes by applying an inpatient volume measure (admissions) to a

ratio of gross inpatient and outpatient revenue to gross inpatient revenue. Gross inpatient and outpatient revenue reflect gross inpatient and outpatient charges

prior to estimated contractual adjustments, uninsured discounts, implicit price concessions, and other discounts. The calculation of adjusted admissions is

summarized as follows:

Adjusted Admissions = Admissions x (Gross Inpatient Revenue + Gross Outpatient Revenue)

Gross Inpatient Revenue

(6) “Inpatient surgeries.” This metric represents the number of surgeries performed on patients who have been admitted to our hospitals. Pain management, c-

sections, and certain diagnostic procedures are excluded from inpatient surgeries.

(7) “Outpatient surgeries.” This metric represents the number of surgeries performed on patients who have not been admitted to our hospitals. Pain management, c-

sections, and certain diagnostic procedures are excluded from outpatient surgeries.

(8) “Emergency room visits.” This metric represents the total number of patients provided with emergency room treatment during the applicable period.

(9) “Patient days.” This metric represents the total number of days of care provided to patients admitted to our hospitals during the applicable period.

(10) “Total encounters.” This metric represents the total number of events where healthcare services are rendered resulting in a billable event during the applicable

period. This includes both hospital and ambulatory patient interactions.

(11) “Average length of stay.” This metric represents the average number of days admitted patients stay in our hospitals.

(12) “Net patient service revenue per adjusted admission.” This metric represents net patient service revenue divided by adjusted admissions for the applicable

period. Net patient service revenue reflects gross inpatient and outpatient charges less estimated contractual adjustments, uninsured discounts, implicit price

concessions, and other discounts.

### Overview of the Three Months Ended March 31, 2025

Total revenue for the three months ended March 31, 2025 increased $58.2 million, or 4.0%, compared to the same prior year

period. The increase in total revenue for the three months ended March 31, 2025 consisted of an increase in adjusted

admissions of 2.7% and an increase in net patient service revenue per adjusted admission of 1.2%. The increase in adjusted

admissions reflected growth in admissions and emergency room visits of 7.6% and 2.3%, respectively, partially offset by a

decrease in total surgeries of 0.7%. The increase in net patient service revenue per adjusted admission was attributable to

negotiated commercial and governmental rate increases, partially offset by an increase in lower acuity cases and a decrease in

oncology and infusion revenue resulting from the Company's strategic decision to transfer certain services to a health system

partner in the second quarter of 2024.

Total operating expenses increased $40.6 million for the three months ended March 31, 2025 compared to the same prior year

period due to higher patient volumes, but decreased 1.1% as a percentage of total revenue. The decrease in total operating

expenses, as a percentage of total revenue, was driven by an increase in other non-operating gains, as a percentage of total

revenue, and a decrease in supplies, as a percentage of total revenue, compared to the same prior year period. The increase in

other non-operating gains, as a percentage of total revenue, was primarily due to the recognition of $21.5 million in insurance

recovery proceeds during the three months ended March 31, 2025 related to the Cybersecurity Incident. The decrease in

supplies, as a percentage of total revenue, was driven by ongoing service line optimization efforts, execution on various

supply chain cost reduction initiatives, and an increase in lower acuity cases compared to the same prior year period. The

decrease in operating expenses, as a percentage of total revenue, was partially offset by increases in salaries and benefits and

professional fees, as percentages of total revenue, compared to the same prior year period. The increase in salaries and

benefits, as a percentage of total revenue, was primarily due to an increase in equity-based compensation of $8.8 million

during the three months ended March 31, 2025, compared to the same prior year period. The increase in professional fees, as

a percentage of total revenue, was driven by higher costs for hospital-based providers due to higher patient volumes and

rising physician-related expenses during the three months ended March 31, 2025, compared to the same prior year period.

### Comparison of the Three Months Ended March 31, 2025 and 2024

*Total revenue —* Total revenue for the three months ended March 31, 2025 increased $58.2 million, or 4.0%, compared to the

same prior year period. The increase in total revenue for the three months ended March 31, 2025 consisted of an increase in

adjusted admissions of 2.7% and an increase in net patient service revenue per adjusted admission of 1.2%. The increase in

adjusted admissions reflected growth in admissions and emergency room visits of 7.6% and 2.3%, respectively, partially

offset by a decrease in total surgeries of 0.7%. The increase in net patient service revenue per adjusted admission was

attributable to negotiated commercial and governmental rate increases, partially offset by an increase in lower acuity cases

and a decrease in oncology and infusion revenue resulting from the Company's strategic decision to transfer certain services

to a health system partner in the second quarter of 2024.

28

*Salaries and benefits —* Salaries and benefits, as a percentage of total revenue, were 43.9% for the three months ended March

31, 2025 compared to 43.2% for the same prior year period. The increase in salaries and benefits, as a percentage of total

revenue, was primarily attributable to an increase in equity-based compensation of $8.8 million.

*Professional fees —* Professional fees, as a percentage of total revenue, were 18.8% for the three months ended March 31,

2025 compared to 18.4% for the same prior year period. The increase in professional fees, as a percentage of total revenue,

reflected higher costs for hospital-based providers due to higher patient volumes and rising physician-related expenses during

the three months ended March 31, 2025.

*Supplies —* Supplies, as a percentage of total revenue, were 17.3% for the three months ended March 31, 2025 compared to

17.9% for the same prior year period. The decrease in supplies expense, as a percentage of total revenue, was attributable to

ongoing service line optimization efforts and execution on various supply chain cost reduction initiatives, including improved

inventory management, standardized surgical supply procurement and strategic sourcing, as well as an increase in lower

acuity cases.

*Rents and leases —* Rents and leases were $27.8 million and $24.9 million for the three months ended March 31, 2025 and

2024, respectively.

*Rents and leases, related party —* Rents and leases, related party, consists of lease expense related to the Ventas Master

Lease, under which we lease 10 of our hospitals, and other lease agreements with Ventas for certain medical office buildings.

Rents and leases, related party, were $38.1 million and $37.2 million for the three months ended March 31, 2025 and 2024,

respectively.

*Other operating expenses —* Other operating expenses, as a percentage of total revenue, were 8.7% for the three months

ended March 31, 2025 compared to 8.5% for the same prior year period.

*Interest expense —* Interest expense was $14.2 million and $19.3 million for the three months ended March 31, 2025 and

2024, respectively.

*Other non-operating gains —* Other non-operating gains were $21.3 million for the three months ended March 31, 2025. For

the three months ended March 31, 2024, there were no other non-operating gains. The other non-operating gains resulted

from the recognition of a gain on insurance recovery proceeds of $21.5 million during the three months ended March 31,

2025 related to the Cybersecurity Incident.

*Income tax expense —* We recorded income tax expense of $15.2 million, which equates to an effective tax rate of 20.5%, for

the three months ended March 31, 2025 compared to income tax expense of $10.7 million, which equates to an effective tax

rate of 18.9%, for the same prior year period. The increase in income tax expense was primarily driven by an increase in

income before income taxes attributable to Ardent Health Partners, Inc., which resulted in an increase in taxes at the federal

statutory rate during the three months ended March 31, 2025 compared to the same prior year period. Additionally, the

effective tax rate was further impacted by permanent differences resulting from the disallowance of certain equity-based

compensation incurred during the three months ended March 31, 2025 compared to same prior year period.

*Net income attributable to noncontrolling interests —* Net income attributable to noncontrolling interests of $17.6 million for

the three months ended March 31, 2025 compared to $18.8 million for the same prior year period consisted primarily of

$17.6 million and $17.7 million of net income attributable to minority partners’ interests in hospitals and ambulatory services

that are owned and operated though LLCs and consolidated by us for the three months ended March 31, 2025 and 2024,

respectively. Income from operations before income taxes related to these LLCs was $62.6 million and $61.7 million for the

three months ended March 31, 2025 and 2024, respectively. The remaining portion of net income attributable to

noncontrolling interests for the three months ended March 31, 2024 consisted of net income attributable to ALH Holdings,

LLC’s (a subsidiary of Ventas, a related party) minority interest in AHP Health Partners, our direct subsidiary, prior to the

ALH Contribution in July 2024.

29

### Supplemental Non-GAAP Information

We have included certain financial measures that have not been prepared in a manner that complies with U.S. generally

accepted accounting principles (“GAAP”), including Adjusted EBITDA and Adjusted EBITDAR. We define these terms as

follows:

### Performance Measure

- “Adjusted EBITDA” is defined as net income plus (i) provision for income taxes, (ii) interest expense and (iii)

depreciation and amortization expense (or EBITDA), as adjusted to deduct noncontrolling interest earnings, and

excludes the effects of other non-operating losses; Cybersecurity Incident recoveries, net of incremental information

technology and litigation costs; restructuring, exit and acquisition-related costs; expenses incurred in connection

with the implementation of Epic Systems (“Epic”), our integrated health information technology system; equity-

based compensation expense; and loss from disposed operations. See “Supplemental Non-GAAP Performance

Measure.”

### Valuation Measure

- “Adjusted EBITDAR” is defined as Adjusted EBITDA further adjusted to add back rent expense payable to real

estate investment trusts ("REITs"), which consists of rent expense pursuant to the Ventas Master Lease, lease

agreements associated with the MOB Transactions (as defined below) and a lease arrangement with Medical

Properties Trust, Inc. ("MPT") for Hackensack Meridian Mountainside Medical Center. See “Supplemental Non-

GAAP Valuation Measure.”

### Supplemental Non-GAAP Performance Measure

Adjusted EBITDA is a non-GAAP performance measure used by our management and external users of our financial

statements, such as investors, analysts, lenders, rating agencies and other interested parties, to evaluate companies in our

industry.

Adjusted EBITDA is a performance measure that is not prepared in accordance with GAAP and is presented in this Quarterly

Report because our management considers it an important analytical indicator that is commonly used within the healthcare

industry to evaluate financial performance and allocate resources. Further, our management believes that Adjusted EBITDA

is a useful financial metric to assess our operating performance from period to period by excluding certain material non-cash

items and unusual or non-recurring items that we do not expect to continue in the future and certain other adjustments we

believe are not reflective of our ongoing operations and our performance.

Because not all companies use identical calculations, our presentation of the non-GAAP measure may not be comparable to

other similarly titled measures of other companies.

While we believe this is a useful supplemental performance measure for investors and other users of our financial

information, you should not consider the non-GAAP measure in isolation or as a substitute for net income or any other items

calculated in accordance with GAAP. Adjusted EBITDA has inherent material limitations as a performance measure, because

it adds back certain expenses to net income, resulting in those expenses not being taken into account in the performance

measure. We have borrowed money, so interest expense is a necessary element of our costs. Because we have material capital

and intangible assets, depreciation and amortization expense are necessary elements of our costs. Likewise, the payment of

taxes is a necessary element of our operations. Because Adjusted EBITDA excludes these and other items, it has material

limitations as a measure of our performance.

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The following table presents a reconciliation of Adjusted EBITDA, a performance measure, to net income, determined in

accordance with GAAP:

*(in thousands)*

|  | Three Months Ended March 31, 2025 | 2024 |
| --- | ---: | ---: |
| Net income | $58,965 | $45,851 |
| Adjusted EBITDA Addbacks: |  |  |
| Income tax expense | 15,233 | 10,713 |
| Interest expense | 14,176 | 19,261 |
| Depreciation and amortization | 36,201 | 35,351 |
| Noncontrolling interest earnings | (17,582) | (18,804) |
| Other non-operating losses (a) | 217 | — |
| Cybersecurity Incident recoveries, net (b) | (19,705) | — |
| Restructuring, exit and acquisition-related costs (c) | 919 | 2,337 |
| Epic expenses (d) | 488 | 589 |
| Equity-based compensation | 9,263 | 512 |
| Loss from disposed operations | 26 | 4 |
| Adjusted EBITDA | $98,201 | $95,814 |

(a) Other non-operating losses include losses realized on certain non-recurring events or events that are non-operational in nature.

(b) Cybersecurity Incident recoveries, net represent insurance recovery proceeds associated with the Cybersecurity Incident, net of

incremental information technology and litigation costs.

(c) Restructuring, exit and acquisition-related costs represent (i) enterprise restructuring costs, including severance costs related to work

force reductions of $1.9 million for the three months ended March 31, 2024, (ii) penalties and costs incurred for terminating pre-existing

contracts at acquired facilities of $0.2 million for each of the three months ended March 31, 2025 and 2024, and (iii) third-party

professional fees and expenses, salaries and benefits, and other internal expenses incurred in connection with potential and completed

acquisitions of $0.7 million and $0.2 million for the three months ended March 31, 2025 and 2024, respectively.

(d) Epic expenses consist of various costs incurred in connection with the implementation of Epic, our health information technology

system. These costs included professional fees of $0.5 million and $0.6 million for the three months ended March 31, 2025 and 2024,

respectively. Epic expenses do not include the ongoing costs of the Epic system.

### Liquidity and Capital Resources

### Liquidity

Our primary sources of liquidity are available cash and cash equivalents, cash flows from our operations and available

borrowings under our ABL Facilities (as defined below). Our primary cash requirements are our operating expenses, the

service of our debt, capital expenditures on our existing properties, acquisitions of hospitals and other healthcare facilities,

and distributions to noncontrolling interests. We believe the combination of cash flow from operations and available cash and

borrowings will be adequate to meet our short-term liquidity needs. Our ability to make scheduled payments of principal, pay

interest on, or refinance, our indebtedness, pay distributions or fund planned capital expenditures will depend on our ability to

generate cash in the future. This ability is, to a certain extent, subject to general economic, financial, competitive, legislative,

regulatory and other factors that are beyond our control.

At March 31, 2025, we had total cash and cash equivalents of $495.0 million and available liquidity of $790.1 million. Our

available liquidity was comprised of $495.0 million of total cash and cash equivalents plus $295.1 million in available

capacity under the ABL Credit Agreement, which is reduced by outstanding borrowings and outstanding letters of credit. In

June 2024, we amended the ABL Credit Agreement to increase commitments available thereunder by $100.0 million and

extended its maturity date to June 26, 2029. See "Senior Secured Credit Facilities" for additional information. At March 31,

2025, our net leverage ratio, as calculated under our ABL Credit Agreement and Term Loan B Credit Agreement, was 1.4x,

and our lease-adjusted net leverage ratio was 3.0x. Our lease adjusted net leverage is calculated as net debt as of March 31,

2025, plus 8.0x trailing twelve month REIT rent expense as of the end of the first quarter of 2025, divided by the trailing

twelve month Adjusted EBITDAR as of March 31, 2025.

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### Cash Flows

The following table summarizes certain elements of the statements of cash flows (in thousands):

|  | Three Months Ended March 31, 2025 | 2024 |
| --- | ---: | ---: |
| Net cash used in operating activities | $(24,787) | $(14,689) |
| Net cash used in investing activities | (23,122) | (31,638) |
| Net cash used in financing activities | (13,832) | (18,484) |

### Operating Activities

Cash flows used in operating activities for the three months ended March 31, 2025 totaled $24.8 million compared to $14.7

million for the same prior year period. The decrease in operating cash flows during the three months ended March 31, 2025

was impacted by changes in net working capital of $28.0 million. The change in working capital was driven by increased

volumes, as well as the return to standard processing and billing collections during the three months ended March 31, 2024

following the Cybersecurity Incident, which contributed to increased collections during the three months ended March 31,

2024 offset, in part, by increased disbursements.

### Investing Activities

Cash flows used in investing activities for the three months ended March 31, 2025 totaled $23.1 million compared to $31.6

million for the same prior year period. Capital expenditures for non-acquisitions were $22.9 million and $23.8 million for the

three months ended March 31, 2025 and 2024, respectively.

### Financing Activities

Cash flows used in financing activities for the three months ended March 31, 2025 totaled $13.8 million compared to cash

flows used in financing activities of $18.5 million for the same prior year period. Cash flows used in financing activities for

the three months ended March 31, 2025 included distributions paid to noncontrolling interests of $19.2 million, payments of

principal on long-term debt of $1.4 million, and payments of principal on insurance financing arrangements $3.1 million,

which were partially offset by proceeds from insurance financing arrangements of $11.0 million.

Cash flows used in financing activities for the three months ended March 31, 2024 totaled $18.5 million and included

distributions paid to noncontrolling interests of $14.3 million, payments of principal on long-term debt of $3.5 million, and

payments of principal on insurance financing arrangements of $1.6 million, which were partially offset by proceeds from

long-term debt of $1.0 million.

### Capital Expenditures

We make significant, targeted investments to maintain and modernize our facilities, introduce new technologies, and expand

our service offerings. We expect to finance future capital expenditures with internally generated and borrowed funds. Capital

expenditures for property and equipment were $22.9 million and $23.8 million for the three months ended March 31, 2025

and 2024, respectively.

### Ventas Master Lease

Effective August 4, 2015, we sold the real property for ten of our hospitals to Ventas, which is a related party as, prior to our

IPO, it was a common unit holder of Ardent Health Partners, LLC and owned shares of common stock of AHP Health

Partners and had a representative serving on our board of managers. Concurrent with this transaction, we entered into a 20-

year master lease agreement that expires in August 2035 (with a renewal option for an additional ten years) to lease back the

real estate. We lease ten of our hospitals pursuant to the Ventas Master Lease. As of March 31, 2025, following the

consummation of the IPO and the underwriters’ exercise of their option to purchase additional shares, Ventas beneficially

owned approximately 6.5% of our outstanding common stock.

32

The Ventas Master Lease includes a number of significant operating and financial restrictions, including requirements that we

maintain a minimum portfolio coverage ratio of 2.2x and a guarantor fixed charge coverage ratio of 1.2x and do not exceed a

guarantor net leverage ratio of 6.75x. In addition, the Relative Rights Agreement entered into by and among Ventas, the

5.75% Senior Notes trustee and the administrative agents under our Senior Secured Credit Facilities (as defined below) in

connection with the series of debt transactions completed during 2021 to refinance our then-existing debt, among other

things, (i) sets forth the relative rights of Ventas and the administrative agents with respect to the properties and collateral

related to the Ventas Master Lease and securing our Senior Secured Credit Facilities, (ii) caps the amount of indebtedness

incurred or guaranteed by our subsidiaries that are tenants under the Ventas Master Lease ("Tenants") (together with such

Tenants’ guarantees of the notes and the Senior Secured Credit Facilities and all other indebtedness incurred or guaranteed by

such Tenants) at $375.0 million and (iii) imposes certain incurrence tests on the incurrence of additional indebtedness by such

Tenants and by us.

We recorded rent expense of $38.1 million and $37.2 million for the three months ended March 31, 2025 and 2024,

respectively, related to the Ventas Master Lease and other lease agreements with Ventas for certain medical office buildings.

### Senior Secured Credit Facilities

Effective July 8, 2021, we entered into the ABL Credit Agreement, which was amended most recently on June 26, 2024. The

ABL Credit Agreement (as so amended) consists of a $325.0 million senior secured asset-based revolving credit facility with

a five year maturity, comprised of (i) a $275.0 million non-UT Health East Texas borrowers tranche (the “non-UT Health

East Texas ABL Facility”) and (ii) a $50.0 million UT Health East Texas borrowers tranche available to our AHS East Texas

Health System, LLC subsidiary and certain of its subsidiaries (the “UT Health East Texas ABL Facility” and, together with

the non-UT Health East Texas ABL Facility, the “ABL Facilities”), each subject to a borrowing base. The ABL Facilities

mature on June 26, 2029.

Effective August 24, 2021, we entered into the Term Loan B Facility. The credit agreement governing the Term Loan B

Facility provided funding up to a principal amount of $900.0 million with a seven-year maturity. Principal under the Term

Loan B Facility was due in quarterly installments of 0.25% of the initial $900.0 million principal amount as of the execution

of the credit agreement (subject to certain reductions from time to time as a result of the application of prepayments), with the

remaining balance due upon maturity of the Term Loan B Facility. Effective June 8, 2023, we amended the Term Loan B

Credit Agreement to replace LIBOR with the Term SOFR and Daily Simple SOFR (each as defined in the amended Term

Loan B Credit Agreement) as the reference interest rate. On June 26, 2024, we prepaid $100.0 million of the $877.5 million

outstanding borrowings under the Term Loan B Facility using cash on hand, which prepaid all remaining required quarterly

principal payments; and no modification was made to the Term Loan B Credit Agreement as a result of this prepayment.

Effective July 19, 2024, pursuant to the terms of the Term Loan B Credit Agreement and as a result of the IPO, the applicable

margin was automatically reduced by 25 basis points to 3.25% over Term SOFR and 2.25% over base rate. On September 18,

2024, we executed an amendment to reprice our Term Loan B Credit Agreement. The repricing reduced the applicable

interest rate by 50 basis points from Term SOFR plus 3.25% to Term SOFR plus 2.75% and from the base rate plus 2.25% to

the base rate plus 1.75%, and it eliminated the credit spread adjustment. No modifications were made to the maturity of the

loans as a result of the repricing and all other terms were substantially unchanged.

We refer to the Term Loan B Facility and the ABL Facilities collectively herein as the “Senior Secured Credit Facilities.”

Subject to certain exceptions, the ABL Facilities are secured by first priority liens over substantially all of our and each

guarantor’s accounts and other receivables, chattel paper, deposit accounts and securities accounts, general intangibles,

instruments, investment property, commercial tort claims and letters of credit relating to the foregoing, along with books,

records and documents, and proceeds thereof (the “ABL Priority Collateral”), and a second priority lien over substantially all

of our and each guarantor’s other assets (including all of the capital stock of the domestic guarantors and first priority

mortgage liens on any fee-owned real property valued in excess of $5,000,000) (the “Term Priority Collateral”). The

obligations of the UT Health East Texas ABL Facility are not secured by the assets of the subsidiaries that are also Tenants

and certain other subsidiaries related to the Tenants. The obligations under the Term Loan B Facility and the ABL Facilities

in excess of the maximum aggregate dollar cap amount permitted to be guaranteed by the Tenants are not secured by the

assets of the Tenants.

The Term Loan B Facility is secured by a first priority lien on the Term Priority Collateral and a second priority lien on the

ABL Priority Collateral. Certain excluded assets are not included in the Term Priority Collateral or the ABL Priority

Collateral. The obligations under the Term Loan B Facility and the ABL Facilities in excess of the maximum aggregate dollar

cap amount permitted to be guaranteed by the Tenants are not secured by the assets of the Tenants.

33

Borrowings under the Term Loan B Facility bear interest at a rate per annum equal to, at our option, either (i) a base rate

determined by reference to the highest of (a) the federal funds effective rate plus 0.50%, (b) the rate last quoted by Bank of

America as the “Prime Rate” in the United States for U.S. dollar loans, and (c) Term SOFR applicable for an interest period

of one month (not to be less than 0.50% per annum), plus 1.00% per annum, in each case, plus an applicable margin, or (ii)

Term SOFR (not to be less than 0.50% per annum) for the interest period selected, in each case, plus an applicable margin.

The applicable margins are as follows:

- under the Term Loan B Credit Agreement, the applicable margin was equal to 2.50% for base rate borrowings and

3.50% for Term SOFR borrowings;

- effective July 19, 2024, pursuant to the terms of the Term Loan B Credit Agreement and as a result of the IPO, the

applicable margin was automatically reduced to 2.25% for base rate borrowings and 3.25% for Term SOFR

borrowings; and

- effective September 18, 2024, we completed a repricing of our Term Loan B Credit Agreement, upon which the

applicable margin was reduced to 1.75% for base rate borrowings and 2.75% for Term SOFR borrowings.

Quarterly installment payments under the Term Loan B Facility are no longer required as a result of our $100.0 million

payment of principal on June 26, 2024, and the remaining principal balance is due upon maturity. The ABL Facilities do not

require installment payments.

At the election of the borrowers under the applicable ABL Facility loan, the interest rate per annum applicable to loans under

the ABL Facilities is based on a fluctuating rate of interest determined by reference to either (i) the base rate plus an

applicable margin or (ii) Term SOFR (not to be lower than 0.00% per annum) for the interest period selected, plus an

applicable margin. The applicable margin is determined based on the percentage of the average daily availability of the

applicable ABL Facility. For the non-UT Health East Texas ABL Facility loan, the applicable margin ranges from 0.5% to

1.0% for base rate borrowings and 1.5% to 2.0% for Term SOFR borrowings. The applicable margin for the UT Health East

Texas ABL Facility loan ranges from 1.5% to 2.0% for base rate borrowings and 2.5% to 3.0% for Term SOFR borrowings.

Subject to certain exceptions (including with regard to the ABL Priority Collateral), thresholds and reinvestment rights, the

Term Loan B Facility is subject to mandatory prepayments with respect to:

- net cash proceeds of issuances of debt by AHP Health Partners or any of its restricted subsidiaries that are not

permitted by the Term Loan B Facility;

- subject to certain thresholds, reinvestment permissions and carve-outs, 100% (with step-downs to 50% and 0%,

based upon achievement of specified senior secured net leverage ratio levels) of net cash proceeds of certain asset

sales;

- subject to certain thresholds, reinvestment permissions and carve-outs, 100% (with step-downs to 50% and 0%,

based upon achievement of specified senior secured net leverage ratio levels) of net cash proceeds of certain

insurance and condemnation events;

- 50% (with step-downs to 25% and 0%, based upon achievement of specified senior secured net leverage ratio levels)

of annual excess cash flow, net of certain voluntary prepayments of secured indebtedness, of AHP Health Partners

and its subsidiaries commencing with the fiscal year ending December 31, 2022; and

- net cash proceeds received in connection with any exercise of the purchase option of the loans by Ventas under the

Relative Rights Agreement.

### 5.75% Senior Notes due 2029

AHP Health Partners (the "Issuer") issued the 5.75% Senior Notes in an exempt offering pursuant to Rule 144A and

Regulation S under the Securities Act that was completed on July 8, 2021. The terms of the 5.75% Senior Notes, which

mature on July 15, 2029, are governed by an indenture, dated as of July 8, 2021 (the “2029 Notes Indenture”), among the

Issuer, us and certain of the Issuer's wholly-owned domestic subsidiaries, as guarantors, and U.S. Bank, National Association,

as trustee. The 2029 Notes Indenture provides that the 5.75% Senior Notes are general senior unsecured obligations of the

Issuer, which are unconditionally guaranteed on a senior unsecured basis by us and certain subsidiaries of the Issuer.

The 5.75% Senior Notes bear interest at a rate of 5.75% per annum, payable semi-annually, in cash in arrears, on January 15

and July 15 of each year, commencing on January 15, 2022.

34

The Issuer may redeem the 5.75% Senior Notes, in whole or in part, at any time and from time to time, at the redemption

prices set forth below, plus accrued and unpaid interest, if any, to the redemption date, subject to compliance with certain

conditions:

| Date (if redeemed during the 12 month period beginning on July 15 of the years indicated below) | Percentage |
| --- | ---: |
| 2025 | 101.438% |
| 2026 and thereafter | 100.000% |

If the Issuer experiences certain change of control events, the Issuer must offer to repurchase all of the 5.75% Senior Notes

(unless otherwise redeemed) at a price equal to 101% of the principal amount thereof, plus accrued and unpaid interest, if

any, to the repurchase date. If the Issuer sells certain assets and does not reinvest the net proceeds or repay senior debt in

compliance with the 2029 Notes Indenture, it must offer to repurchase the 5.75% Senior Notes at 100% of the principal

amount thereof, plus accrued and unpaid interest, if any, to the repurchase date.

### Contractual Obligations and Contingencies

The following table provides a summary of our commitments and contractual obligations for debt, minimum lease payment

obligations under non-cancelable leases and other obligations as of March 31, 2025 (in thousands):

|  | Payments Due by Period Total | Less than 1 Year | 1-3 Years | 3-5 Years | After 5 Years |
| --- | ---: | ---: | ---: | ---: | ---: |
| Long-term debt obligations, with interest | $1,411,846 | $71,694 | $168,164 | $1,156,605 | $15,383 |
| Deferred financing obligations, with interest | 9,286 | 5,637 | 3,185 | 464 | — |
| Operating leases | 2,971,245 | 149,072 | 382,634 | 352,936 | 2,086,603 |
| Estimated self-insurance liabilities | 186,454 | 30,227 | 40,503 | 83,199 | 32,525 |
| Total | $4,578,831 | $256,630 | $594,486 | $1,593,204 | $2,134,511 |

Outstanding letters of credit are required principally by certain insurers and states to collateralize our workers' compensation

programs and self-insured retentions associated with our professional and general liability insurance programs. As of March

31, 2025, we maintained outstanding letters of credit of approximately $32.8 million, which included interest of $3.0 million.

### Supplemental Non-GAAP Valuation Measure

Adjusted EBITDAR is a commonly used non-GAAP valuation measure used by our management, research analysts,

investors and other interested parties to evaluate and compare the enterprise value of different companies in our industry.

Adjusted EBITDAR excludes: (1) certain material noncash items and unusual or non-recurring items that we do not expect to

continue in the future; (2) certain other adjustments that do not impact our enterprise value; and (3) rent expense payable to

our REITs. We operate 30 acute care hospitals, 12 of which we lease from two REITs, Ventas and MPT, pursuant to long-

term lease agreements. Additionally, during 2022, we completed the sale of 18 medical office buildings to Ventas in

exchange for $204.0 million and concurrently entered into agreements to lease the real estate back from Ventas over a 12-

year initial term with eight options to renew for additional five-year terms (the "MOB Transactions"). Our management views

the long-term lease agreements with Ventas and MPT, as well as the MOB Transactions, as more like financing arrangements

than true operating leases, with the rent payable to such REITs being similar to interest expense. As a result, our capital

structure is different than many of our competitors, especially those whose real estate portfolio is predominately owned and

not leased. Excluding the rent payable to such REITs allows investors to compare our enterprise value to those of other

healthcare companies without regard to differences in capital structures, leasing arrangements and geographic markets, which

can vary significantly among companies. Our management also uses Adjusted EBITDAR as one measure in determining the

value of prospective acquisitions or divestitures. Finally, financial covenants in certain of our lease agreements, including the

Ventas Master Lease, use Adjusted EBITDAR as a measure of compliance. Adjusted EBITDAR does not reflect our cash

requirements for leasing commitments. As such, our presentation of Adjusted EBITDAR should not be construed as a

performance or liquidity measure.

Because not all companies use identical calculations, our presentation of the non-GAAP measure may not be comparable to

other similarly titled measures of other companies.

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While we believe this is a useful supplemental valuation measure for investors and other users of our financial information,

you should not consider the non-GAAP measure in isolation or as a substitute for net income or any other items calculated in

accordance with GAAP. Adjusted EBITDAR has inherent material limitations as a valuation measure, because it adds back

certain expenses to net income, resulting in those expenses not being taken into account in the valuation measure. The

payment of taxes and rent is a necessary element of our valuation. Because Adjusted EBITDAR excludes these and other

items, it has material limitations as a measure of our valuation.

The following table presents a reconciliation of Adjusted EBITDAR, a valuation measure, to net income, determined in

accordance with GAAP:

*(in thousands)*

|  | Three Months Ended March 31, 2025 |
| --- | ---: |
| Net income | $58,965 |
| Adjusted EBITDAR Addbacks: |  |
| Income tax expense | 15,233 |
| Interest expense | 14,176 |
| Depreciation and amortization | 36,201 |
| Noncontrolling interest earnings | (17,582) |
| Other non-operating losses (a) | 217 |
| Cybersecurity Incident recoveries, net (b) | (19,705) |
| Restructuring, exit and acquisition-related costs (c) | 919 |
| Epic expenses (d) | 488 |
| Equity-based compensation | 9,263 |
| Loss from disposed operations | 26 |
| Rent expense payable to REITs (e) | 40,887 |
| Adjusted EBITDAR | $139,088 |

(a) Other non-operating losses include losses realized on certain non-recurring events or events that are non-operational in nature.

(b) Cybersecurity Incident recoveries, net represent insurance recovery proceeds associated with the Cybersecurity Incident, net of

incremental information technology and litigation costs.

(c) Restructuring, exit and acquisition-related costs represent (i) penalties and costs incurred for terminating pre-existing contracts at

acquired facilities of $0.2 million and (ii) third-party professional fees and expenses, salaries and benefits, and other internal expenses

incurred in connection with potential and completed acquisitions of $0.7 million.

(d) Epic expenses consist of various costs incurred in connection with the implementation of Epic, our health information technology

system. These costs included professional fees of $0.5 million. Epic expenses do not include the ongoing costs of the Epic system.

(e) Rent expense payable to REITs consists of rent expense of $38.1 million related to the Ventas Master Lease and lease agreements

associated with the MOB Transactions with Ventas and rent expense of $2.8 million related to a lease arrangement with MPT for the

lease of Hackensack Meridian Mountainside Medical Center.

### Critical Accounting Policies and Estimates

The preparation of financial statements in accordance with GAAP requires us to make estimates and assumptions that affect

reported amounts and related disclosures. We regularly evaluate the accounting policies and estimates we use. In general, we

base the estimates on historical experience and on assumptions that we believe to be reasonable, given the particular

circumstances in which we operate. Actual results may vary from those estimates. We consider our critical accounting

estimates to be those that (i) involve significant judgments and uncertainties, (ii) require estimates that are more difficult for

management to determine, and (iii) may produce materially different outcomes under different conditions or when using

different assumptions.

Refer to *Management's Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting*

*Policies and Estimates* and our audited consolidated financial statements and notes thereto as of and for the year ended

December 31, 2024 included in the Annual Report for a complete and comprehensive discussion of the accounting policies

and related estimates we believe are most critical to understanding our consolidated financial statements, financial condition

and results of operations and that require complex management judgment and assumptions or involve uncertainties. These

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critical accounting estimates include revenue recognition, risk management and self-insured liabilities, and income taxes.

There have been no changes to our critical accounting policies or their application since the date of the Annual Report.

## Market risk

As filed, 2,673 characters.

We are subject to market risk from exposure to changes in interest rates based on our financing, investing and cash

management activities. We do not, however, hold or issue financial instruments or derivatives for trading or speculative

purposes. At March 31, 2025, the following components of our Senior Secured Credit Facilities bore interest at variable rates

at specified margins above either the agent bank’s alternate base rate or Term SOFR: (i) a $900.0 million, seven-year term

loan; and (ii) a $325.0 million, five-year asset-based revolving credit facility. As of March 31, 2025, we had outstanding

variable rate debt of $767.4 million.

At March 31, 2025, we had interest rate swap agreements with notional amounts totaling $401.1 million, expiring June 30,

2026\. Under these swap agreements, we are required to make monthly fixed rate payments at annual rates ranging from

1.47% to 1.48% and the counterparties are obligated to make monthly floating rate payments to us based on one-month Term

SOFR, each subject to a floor of 0.39%. On February 5, 2025, we executed new interest rate swap agreements with an

effective date of June 30, 2025 and expiring June 30, 2029. As of the effective date, the notional amounts will total

$0.6 million, and will accrete up to $400.4 million by June 30, 2026. We are required to make monthly fixed payments at

annual rates ranging from 3.97% to 3.98% and the counterparties are required to make monthly floating rate payments to the

Company based on one-month Term SOFR, each subject to a floor of 0.50%.

Although changes in the alternate base rate or Term SOFR would affect the cost of funds borrowed in the future, we believe

the effect, if any, of reasonably possible near-term changes in interest rates on our variable rate debt on our consolidated

financial position, results of operations or cash flows would not be material. Based on the outstanding borrowings and impact

of the interest rate swaps in place at March 31, 2025, a one percent change in the interest rate would result in a $3.7 million

increase or decrease in our annual interest expense.

We currently believe we have adequate liquidity to fund operations during the near term through the generation of operating

cash flows, cash on hand and access to our Senior Secured Credit Facilities. Our ability to borrow funds under our ABL

Facilities is subject to, among other things, the financial viability of the participating financial institutions. While we do not

anticipate any of our current lenders defaulting on their obligations, we are unable to provide assurance that any particular

lender will not default at a future date.

## Controls and procedures

As filed, 1,755 characters.

### Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our principal executive officer and our principal financial officer, evaluated, as of

the end of the period covered by this Quarterly Report, the effectiveness of our disclosure controls and procedures. Based on

this evaluation of our disclosure controls and procedures as of March 31, 2025, our principal executive officer and principal

financial officer concluded that our disclosure controls and procedures as of such date were effective at the reasonable

assurance level. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the

Securities Exchange Act of 1934, as amended (the “Exchange Act”), means controls and other procedures of a company that

are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the

Exchange Act are recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and

forms. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide

only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the

cost-benefit relationship of possible controls and procedures.

### Changes in Internal Control over Financial Reporting

During the three months ended March 31, 2025, there have been no changes in our internal control over financial reporting,

as such term is defined in Rules 13a-15(f) and 15(d)-15(f) promulgated under the Exchange Act, that have materially

affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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## Risk factors

As filed, 306 characters.

There have been no material changes to our risk factors that we believe are material to our business, results of operations and

financial condition from the risk factors previously disclosed in the section entitled “Risk Factors” included in the Annual

Report, which are incorporated by reference herein.

Filed May 7, 2025.
Source: SEC EDGAR, the filing index for accession 0001628280-25-023210. Last ingested by Listed: Oct 24, 2026, 15:15 ET. No prices; not investment advice.